In the automotive services industry, as in many businesses, customer loyalty is key to success. At its most basic, you can reasonably expect that the more loyal the customer, the more repeat business you can expect from them. Meanwhile, new customers are important, but acquiring them is usually harder and more costly than building on existing customer relationships. The trick is knowing what's most important and when, then balancing your marketing budget to focus on those customers, prospects, and vehicles that represent the most value.
The power of the first transaction
Let's say someone brings their Bugatti to an automotive center for service on a flat tire. Even before you find out that the person lives 50 miles away, you know intuitively that this is probably not going to be a future loyal customer — it's a random incident for a vehicle that likely gets specialized dealer service. On the flip side, if the vehicle is a five-year old Chevrolet and the owner, who lives or works nearby, wants an oil change or tire rotation, that person may well be a good loyalty candidate. That driver and vehicle are more apt to be in your customer "sweet spot."
While these are obvious examples, looking at your data can let you get much more specific and targeted, aiming your marketing spend to prioritize reaching customers with the best messaging, resulting in the best return on your investment. The first transaction is the springboard for new-customer marketing decisions.
Diving into the data — looking at both driver and vehicle information — can tell you the story in detail. Who's likely to respond to an offer for tires or brakes? There is a sweet spot for that as well. Of course, you consider prior transaction data, and maybe you can round things out further if you know there are two types of people driving the same car and you have more information on them. From that first transaction on, the data will begin to reveal that customers are what they drive — defining them in terms of the automotive services marketer's ability to give them what they want, when they want it, based on recognizable traits and general car information.
You Are What You Drive
ROCHESTER, N.Y. — Let's assume that you have a fixed budget and you can only mail, or talk to, a certain number of people. Who do you go after? You can look at the historical transactions of the customer: how many times has the car been in for service? What types of services? What about maintenance? Do they use one or multiple services? Then you can include car data such as year, make, model, mileage, service dates, etc., and start matching up the car with its driver. Combined, this data can give you the ability to predict the driver's likelihood to respond to future offers.
You can — and should — market to a vehicle and a customer based on past behaviors and product and service history. You may know that a seven-year-old sedan, probably worth $15,000, is a good target. You don't just write a business rule that prescribes to that; you use data science to confirm that specifically for each individual customer. You look at both the vehicles and their drivers, because they are what they drive. Once you get it straight, you can start targeting "look-alikes."
Let's say you have a customer that puts high mileage on their car every month. You know it by connecting the dots between their service visits. The combined car and driver data, informed by your staff input, may indicate that a 50-mile commute is the reason. Understanding this, the automotive services provider has a chance to get ahead of the curve, anticipating and offering what they need, when they need it, often before they are aware of the need. Not only is that smart service, it's smart marketing that creates a loyal — and profitable — customer.
Using data to recognize that customers are what they drive continually identifies these pockets of opportunity.
Finding the sweet spot
How does an automotive services provider know when they have found the customer "sweet spot?"
The year and the make of the car are often more important than the model, although that's vital. What yields the most information on the car and driver? Often, finding the customer sweet spot means grouping it with other, similar vehicles, looking at all that relevant data to predict behavior and vehicle needs with increasing accuracy. You learn from predictive analysis that will guide you to maximize your relevancy to the customer.
Maybe a five-year old Ford pickup comes in for new tires. You capture the important vehicle information, you have an idea of its value, and you can group it with other vehicles by similar "traits." Turning to those other grouped vehicles, you can look ahead
three years and see how profitable or unprofitable this pickup may be. You know the need for services will be there, but what else will you learn? You look at three years of transactional data for the similar group and there will be a lot of answers regarding how to market — or not — to this car and driver.
Maybe it's worth enough to just keep in touch at certain points. Maybe, like the Bugatti with the flat, it's just a one-off that's not worth the spend. Or maybe, based on all that data, you can play the tape forward and see that it's worth an ongoing, proactive campaign to address their needs before they ask some other provider. It's money well spent. And that's the sweet spot.
Connecting the dots
Data science lets you connect the dots between when a consumer first becomes a customer and what they are driving, then following those dots into the future to understand what value you and the customer represent to each other. It's worth taking extra steps to make sure transaction data is entered reliably and correctly so that the data patterns will be authentic.
You can compare different vehicles of different ages and predict which will be more valuable for your automotive services business. You may have hunches based on years in the business; data can support or refute those accepted practices and give you alternatives you may never have considered. The opportunity is out there, based on the data you already have.
The data can tell you the story of your customers if you listen. And when you do, you will get the message loud and clear: you must consider both the owner and the vehicle, because your customers are what they drive.
Rick Muldowney is the chief analytics officer for digm, a marketing agency that combines complex data analysis and marketing technology to create a holistic customer view with insights that drive businesses forward.